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F I S C A L I M P A C T R E P O R T

SPONSOR HBIC

ORIGINAL DATE

LAST UPDATED

2/13/08

HB 593/HBICS

SHORT TITLE Motor Vehicle Insurance Changes

SB

ANALYST Earnest

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

none

1,695

1,525 Recurring

MVD

none

$0.1*

$0.1* Recurring General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

*Indeterminate but positive revenue impact due to new $75 penalty assessment fines.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

Administrative Office of the Courts (AOC)

No Response Received From

Department of Public Safety (DPS)

SUMMARY

Synopsis of Bill

The HBIC substitute for HB 593 imposes an additional reinstatement fee of $75 if the

registration for a vehicle was suspended for failure to comply with the Mandatory Financial

Responsibility Act (MFRA), and appropriates the additional fee to MVD for the purpose of

enforcing the MFRA.

The bill also changes the penalty for uninsured motor vehicles from a misdemeanor with a fine

not to exceed $300 to a penalty assessment misdemeanor with a $75 fine. The fee for replacing a

plate that has been removed or defaced by a law enforcement officer for failure to comply with

the MFRA is increased from $25 to $100. The bill clarifies that temporary operation stickers

issued to drivers that have been cited for a violation of the Mandatory Financial Responsibility

Act shall not create liability on the part of the officer or the Taxation and Revenue Department

for damages arising from the future operation of the vehicle.

House Bill 593/HBICS – Page

2

The bill additionally prohibits law enforcement officers from charging a person with failure to

carry evidence of financial responsibility if the officer can verify the person’s compliance with

MFRA by checking a computer database that is immediately available to the officer.

FISCAL IMPLICATIONS

TRD based the revenue impact for MVD on 22,618 reinstatements in FY07 times the $75

increase in reinstatement fees. Declining amounts in future years reflects assumed increased

compliance. The general fund revenue impact reflects increased penalty assessment fines,

lessened by a decrease in misdemeanor fines, but an overall positive fiscal impact. TRD/MVD

has no information on the number or level of fines imposed under the existing statute, but it is

presumed to be small.

This bill provides for continuing appropriations by appropriating revenue to the Motor Vehicle

Division. The LFC has concerns with including continuing appropriation language in statutory

provisions, as earmarking reduces the ability of the legislature to establish spending priorities.

SIGNIFICANT ISSUES

The increased reinstatement fee may result in increased compliance with the Mandatory

Financial Responsibility Act requirement that drivers must maintain liability insurance. While

some number of fines may be imposed for failure to have insurance, probably many more are

identified through the New Mexico Insurance Identification Database (IIDB), resulting in

suspension of the vehicle registration but without imposition of misdemeanor fines.

TRD reports that the bill is designed to further decrease the uninsured rate. If made law, this bill

may close loopholes, increase compliance and make people more inclined to purchase and

maintain insurance. Since 2002, MVD has been funded to implement the Mandatory Financial

Responsibility Act, which requires that vehicles maintain liability insurance. Since then the

uninsured driver rate has gone from among the worst in the nation at 33% to below the national

average of 14%. The current uninsured rate is 10.28%.

It isn’t clear whether a database is available to law enforcement officers to verify whether a

driver is in compliance with the Mandatory Financial Responsibility Act.

AOC notes that as penalties become more severe, defendants may invoke their right to trial and

their right to trial by jury. Conversely, as penalties become less severe, fewer defendants will be

likely to invoke their right to trial and their right to trial by jury.

ADMINISTRATIVE IMPLICATIONS

TRD indicated that the additional funds appropriated to the department in this bill would be used

to fund programs designed to further reduce the uninsured driver rate in New Mexico, and to

increase compliance with insurance requirements. For example, money could be used to work

with local law enforcement to fund efforts, such as booting a vehicle without required insurance.

House Bill 593/HBICS – Page

3

TECHNICAL ISSUES

TRD notes the following technical issue:

On page 5, lines 21-22, the $100 reinstatement fee is presumably the same reinstatement

fee provided in Section 1 of the bill ($25 plus an additional $75). This should probably

be more clearly specified, either by referencing a “reinstatement fee specified in Section

66-5-33.1 NMSA 1978

", or “in addition to

the reinstatement fee specified in 66-5-33.1

NMSA 1978, an additional reinstatement fee of $100

."

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